Looking Back 10 Years

By Carl Spiess, CFP, CIM, FMA, FCSI, MBA, Director, Wealth Management

The summer issue of this newsletter from 10 years ago is interesting reading. Back then, we had RSP (Canadian) and 20%-RSP
(Foreign) eligible funds. The top performing Canadian funds were mostly financial and dividend funds, with the worst
performers being precious metals and resource funds. For example, the Dynamic Precious Metals fund (see chart, below) had a 10 year average
return of only 1% and was a bottom 10 performer from June 1988 to June 1998 and had negative 1, 3 and 5 year returns. From
June 1998 to June 2008 it however returned 18.4% a year. Similarly, global funds and US equity funds were outperforming many
Canadian funds.

How times have changed since then! Over the last 10 years, the average global fund, has returned 0.7%, and many
investors are thinking about giving up on global markets and only investing in Canadian (resource) stocks. I have been cautioning clients
against this. While Canada was the last market standing at the end of June, it has now also dipped into negative territory, year-to-date.
There is still good value in holding onto international investments for diversification. Looking at the fund performance from 10 years
back shows that what might have seemed like a "dog" was actually a "rising star" (and vice versa). And since you never know
what the next rising star will be, it pays to keep your money spread around, both geographically and sector-wise.

One last item of note in the issue of the newsletter from 10 years ago. We featured 3 fund managers: Kim Shannon of
Spectrum Canadian (merged into CI Canadian fund), Dick Habermann of Fidelity Canadian Asset
Allocation, and Mark Holowesko of Templeton Growth Fund (see chart and table, below). While in each case, managers on the funds have
changed, the funds have been good performers in their categories (Canadian Balanced, Canadian Equity and Global, respectively)
and all 3 remain on our recommended list, 10 years later.

But what of Templeton Growth? Sir John Templeton passed away recently, 20 years after turning over management of the
Templeton Growth fund to his successors. Does the 1.5% average return over the last 10 years mean the fund is now a failure?
Quite contrary, it simply illustrates how the rising Canadian dollar, and high global valuations from 10 years ago have made
global investing very difficult. The fund (after all expenses) has beat the index return of 0.8% (and beat the global index funds or ETFs) over
the same period. It's a strong performer in its category.

It is interesting to see what the managers were worried about 10 years ago, namely the crisis in Asia, stagnant energy
prices, and a weakening manufacturing economy in the US. Some issues turned out to be very short term. Others continue to
this day.

We continue to recommend all 3 of these funds from 10 years ago within their categories.

If your June statement was a shock (and July may well be too), please contact us to review your account. It may be time
to add to your equity holdings if you have cash on the sidelines and are a long term investor, or it may be time to become
more conservative if you are close to retirement. Or if the volatility in the equity markets has really got you worried,
we can always lock in a rate with GICs (4.5% currently). We would be pleased to review your personal situation so don't
hesitate to call us.

More on looking back 10 years

Scotiabank's Corporate Social Responsibility

Scotiabank defines corporate social responsibility (CSR) as the way we interact with all of our stakeholders - our
shareholders, customers, employees and communities - to meet our social, economic, environmental and ethical responsibilities.
CSR is a fundamental part of the way we do business, and an essential element of our success.

BCE Deal Looks More Likely Again

The buyout of Bell Canada is looking much more like a sure thing, after the latest Ruling from the Supreme Court of
Canada. We expect shareholders to receive $42.75 in December. For those clients with significant Capital Gains, please
contact us to review tax minimization strategies as we get closer to year end. The following summary is a good starting
point for familiarizing yourself with the tax issues, including the benefits of using the shares in your charitable giving.

Canadian Medical Discoveries Fund Suspends Redemptions

Last month, Canadian Medical Discoveries Fund (CMDF) announced that effective immediately, they have suspended redemptions
and sales of their fund until further notice.

The fund's board of directors is in the process of exploring options to maximize returns for all unitholders. The fund
will continue to be valued each day for current unitholders. A decision should be reached by the end of the year as to
which direction the fund will be moving. We will continue monitor this situation for your accounts and will provide
information on the status of the fund as information becomes available.

While a few Labour Sponsored Investment Funds (LSIFs) have generated positive after tax returns, most have not. However,
their tax benefits have still made them profitable in many cases. The benefit is not as
clear cut going forward since the Ontario government has started its phase out of the provincial tax credit. We have been
reviewing these on a case-by-case basis. For clients who have any labour funds, we will continue to monitor when yours are
clear of the required holding period and be in touch with you directly or at the time of an annual account review.

Summertime

We hope you are enjoying your summer. Your investment team, spouses and children enjoyed a family BBQ recently. The
rented rock wall was a terrific team building adventure. See the photo, and visit our team page to learn more about your team.

We are also pleased to announce that Claudia Ochoa has joined the team full time. Other than that, your associates have remained
unchanged for the last 5 years.

We call your attention again to Scotia Online. You now have the ability to access your statements in electronic format
instead of receiving them by mail. In April, paperless record keeping, known as eRecords, was launched through Scotia Online.
This new service means that you no longer have to wait until your statement arrives to view your account balances and
transactions. eRecords will be available days in advance of traditional mail, and statements are accessible 24 hours a day,
7 days a week. Not only is it convenient and economical to go paperless, there will be one less paper to file and a few more
trees still standing.

ScotiaMcLeod Online users can sign up for this service through the Accounts and Transfers tab under
Investing. Use the Document Preferences link at the bottom of the left menu (see graphic, below).

® Registered trademark of The Bank of Nova Scotia, used under licence. ™ Trademark of The Bank of Nova Scotia, used under licence. Scotia Wealth Management™ consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank®); The Bank of Nova Scotia Trust Company (Scotiatrust®); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod®, a division of Scotia Capital Inc. ("SCI"). Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of SCI. Insurance services are provided by Scotia Wealth Insurance Services Inc., the insurance subsidiary of SCI. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Underwriters (Financial Security Advisors in Québec) representing Scotia Wealth Insurance Services Inc. SCI is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

The Spiess McGlade Team is a personal trade name of Carl Spiess and Allan McGlade.